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Shrinking Hanjin fleet signals fall of South Korean shipping

Hanjin Shipping Co's fleet has shrunk to about a tenth of its size after the South Korean container line returned most of its chartered vessels to owners in the weeks following its bankruptcy filing.

PHOTO: REUTERS

[SINGAPORE] Hanjin Shipping Co's fleet has shrunk to about a tenth of its size after the South Korean container line returned most of its chartered vessels to owners in the weeks following its bankruptcy filing.

All but three of the remaining 14 ships are either stranded or have been seized over unpaid bills. Hanjin once operated 97 box ships, including 61 that were chartered. As overcapacity depressed freight rates and Hanjin's debt piled up, lenders pulled the plug on credit, prompting the company to apply for court receivership on Aug 31. A preferred bidder for some of its assets is set to be announced Monday.

The Seoul Central District Court, which is overseeing the receivership, plans to name the preferred bidder for Hanjin's Asia-US operations Monday. Hyundai Merchant Marine Co and Korea Line Corp, a bulk ship operator, have submitted final bids for the fire sale.

In signs of fading prospects of South Korea's shipping industry, third-quarter earnings on Monday may show losses at Seoul-based Hanjin and Hyundai Merchant. Daewoo Shipbuilding & Marine Engineering Co, which builds vessels for the industry, is projected to report a net income of 20.3 billion won (S$23.9 million) based on the average of six estimates compiled by Bloomberg.

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Hanjin was the world's seventh-biggest container line with a market share of 2.9 per cent, making it the only Korean carrier to feature in the global top 10. Now, it's plummeted to 21st in rankings with about 0.5 per cent share, according to Alphaliner, a shipping data provider.

Of the chartered vessels, all except two have been returned to owners, who have since leased them to others and changed the ships' names. Maersk Line, the world's biggest boxship operator owned by AP Moeller-Maersk A/S, has said it's among companies that have taken on some of the Hanjin vessels.

Hanjin's bankruptcy filing triggered disruptions in global supply chains ahead of the peak shipping period for the US Thanksgiving and Christmas shopping season.

The operator said last month that it was winding down its European business and on Nov 10 said it would let go of about 700 crew members.